The Ford F-150 is America's
favorite pickup truck, actually, scratch that, it is America's
favorite vehicle, full stop. SUVs might be the talk of
the automotive industry, but the F-150 is still the strongest selling
model of any kind in the United States. It is also the
product that many say keeps the lights on at Ford. The F-Series line of full sized
trucks sells so well in the U.S. that in 2019 it outsold all
of rival GMs full sized trucks by 11%. That includes both the
Chevrolet and GMC brands. But the F-150 needs
to stay on top. Due to some steep US taxes
on imported trucks, a loyal and patriotic customer base, and to
be fair, very strong products. Americans dominate the
domestic truck market. Toyota and Nissan, for example, do
sell pickups in the U.S., but more than 80% of sales go
to Ford, General Motors, and Fiat Chrysler. And yet
competition is fierce. General Motors is still
a formidable competitor. And Fiat Chrysler's RAM brand has
been ratcheting its way up from third place to vie for
second among brand names with GM's Chevrolet. Pickup sales are growing
and automakers are carving out niches in the market, hoping to
scoop up a few more buyers here and there. And, of
course, the electrification trend is penetrating the truck
market as well. Not only are these so-called
Big Three competing with each other, a new crop of truck makers
such as Tesla and Rivian want to be the brands present and
future generations turn to for their everyday workhorses. Ford is also becoming ever more
dependent on sales of large SUVs and trucks and
on North American customers. Unfortunately for Ford, its Detroit
rivals are in a similar position. In 2020, the
second largest U.S. automaker was still in the midst
of a multiyear turnaround plan and had just appointed its
third CEO in six years. During this time, Ford also
began rolling out the latest generation of its market leading
and profitmaking F-150, which it needs now more than ever. Ford's earliest pickup was basically
just a chassis or vehicle frame that was strong and
large enough to accommodate third party truck beds. I think Ford saw the potential
of trucks earlier than anyone else. On July 27th, 1917, Ford
released the Model TT a chassis and cab that was based
on its Model T sedan. The Model TT came with a
heavier duty frame capable of carrying one ton of payload. The factory price was $600,
209 were sold that year. F-Series debuted in 1948. The line had an alphanumeric naming
system like today, but then the half ton was
just called F-1. The F-1 was later
called the F-100. The 1950s were the years when
Ford began dressing up its pickups a bit. It included
amenities many would now consider standard, but were unusual at the
time for a utility vehicle armrests, dome lights,
and sun visors. The F-150 didn't come out until
1975, when Ford beefed up its pickup to compete with new
trucks from General Motors. Two years later, F-150 was the
sales leader in the segment. Really by the late 70s, early
80s, Ford had cemented that role as not just the best selling truck
in the truck market, but the best selling vehicle in
the entire U.S. market. And it never
has relinquished that. The late 1970s were also a time
when truck owners began to see their trucks as more
than work vehicles. In 1978, Ford introduced its
Lariat trim package, which again included features any buyer
today would consider basic. The F-Series Super Duty models began
rolling out in 1998 to serve customers and businesses in
need of bigger trucks. Over time, F-Series has continued to
fill out its offerings at the higher end of the truck market
as truck buyers opt for more luxurious interiors, dazzling
technology, and aggressive performance. It was a purpose driven
vehicle at that point in time, and the big, amorphous shift
that happened over time is it went from a purpose driven vehicle
to get a job done to a prestige vehicle to be seen. Throughout its history, Ford's F-Series
has grown in sales. In 1983, Ford sold
450,108 full size pickups. By 2019, that number had
roughly doubled to 896,526. The F-Series has been the leading
lineup of trucks in America for a long, long time, but
Ford knows it can't surrender its leading position. F-Series is widely
regarded as Ford's profit machine. So Ford has brought forth
a number of innovations to keep convincing buyers they are
purchasing the true market leader. For example, over the years,
the company has made a name for itself in specialty trucks
with fast and quick pickups like the now discontinued SVT
Lightning and off road beasts such as the Raptor. Trucks like these are basically
F-150 trucks with tweaked engines, brakes, suspensions,
and other parts. The Blue Oval has also had
to innovate to keep up with regulations and a truck buyer looking
to hold down fuel costs. In 2011, Ford debuted its
EcoBoost Engine, a highly efficient six cylinder engine that could
deliver power when needed and rationed gas the rest
of the time. EcoBoost technology is now found
across the board on Ford models, but getting the truck world
to accept it took some persuasion. The preferred engine for a
full size truck had long been an eight cylinder, and
Ford's V8s have long been legendary. There was a great deal
of skepticism that an engine with two fewer cylinders could
match V8s in power and performance. But the
EcoBoost proved successful. F-150s can still be bought with
V8s, but Ford says the EcoBoost engine has the highest take
rate among Ford buyers. Ford also took a risk in 2015
when it rolled out a completely new F-150 with an aluminum body,
the first in the business. Aluminum being far lighter than
steel, Ford said the reduced weight would improve
further fuel mileage. The aluminum body is about
700 pounds lighter than steel versions. And again, a
lot of skepticism. But here we are, five years, six
years after that truck hit the market and no questioning of the
strength and durability of the aluminum version of the F-150. The truck remains
the best seller. And the aluminum has not proven to
be any form of a weak spot for the vehicle. Of course, Ford trucks are
not without their critics. Reliability and quality surveys
have been mixed. Consumer Reports gives the F-150
a predicted reliability score of one out of five. However, the F-150 did
quite well in J.D. Power's 2020 vehicle dependability
study and initial quality study. There's also competition. All three American carmakers increasingly
rely on pickups and large SUVs for their profits. Competition from foreign automakers
is a lot fiercer. Among smaller vehicles, General Motors
and Fiat Chrysler are both leaning into the segments
where they are strongest. Fiat Chrysler's RAM brand has been
something of a dark horse in the truck wars as of late. It wowed the truck world with its
2019 RAM 1500, a pickup that won multiple awards and
sold like crazy. Industry insiders praised Ram's
lush, high end interior packages and its adoption of tech
features, such as a 12" touchscreen display embedded
in the dashboard. Ford has also had to fend
off challenges from GM, which has notched a few big innovations of
its own in recent years. For the 2020 model year, GM
debuted a 2.7 liter turbo four cylinder engine on its Chevrolet
Silverado, which is more powerful than the V6,
despite its smaller size. GM's premium truck and SUV brand
GMC has offered all kinds of gadgets on its trucks that
have impressed the market, including cameras that can give a view
of objects behind the vehicle the truck is towing and a multifunction
tailgate that can be folded into a workbench or a
step into the bed. GMC has also been the first to
debut carbon fiber beds on its trucks, which it says are
lighter, stronger and more impact resistant than steel
or aluminum. The aluminum body introduced on
the previous generation, F-150, was big news, so some of the
changes to the vehicle this time around might seem a
bit less ambitious. They're claiming that something like
90 plus percent of the vehicle's new. But whether it's
the styling or the drive trains, it still
feels largely carryover. But you do have
some some interesting innovations. Importantly, there is an optional
hybrid version of the F-150, perhaps the biggest news
for this redesign. Ford has said it is
stressing the power and performance benefits of hybrid vehicles
rather than ecological ones. The hybrid version does get
better gas mileage than other F-150s. But Ford wants to remind
buyers of the excellent low end torque electric motors can
produce, which makes hybrids good options for towing or moving
over steep or uneven terrain. And what we're most excited about
that is targeting over 700 miles of range with the
PowerBoost and targeting over 12,000 pounds of towing. So, again, you
get the benefits of improved fuel economy, but at the same
time don't have to give anything up from a capability stand point.
The F-150 has an array of tools for towing, including a
trailer backup assist feature that drivers can control
via a dashboard knob. Cameras on the truck
also help with steering. There is even a steering guide
that tells drivers which way to turn the wheel. There are a
number of features for customers who use the truck for work,
including a work surface on the tailgate with rulers and holsters for
mobile devices, a cup and a pencil. There are also clamp
pockets on the sides of the tailgate for securing materials. At least some versions of the
F-150 come with some pretty cutting edge tech features that appear
to be aimed at that growing segment of higher end
truck buyers looking for plush interiors full of
gadgets and comforts. We'll be the first full size pickup
in the US that will offer over the air update standard. So this is an opportunity for
us to improve the function and feature capability as our customer
goes through the ownership cycle. There are also some available
options for the truck that show Ford is aiming at cabin
comfort, such as fully reclining seats and a 12" touch screen, a
shot right at the one offered in the 2019 Ram. Being Ford's breadwinner F-Series is
a product line Ford is extremely careful with. I think it's fair to say that
no other automaker is as closely tied to the success of its truck
as a definition of the success of the automaker than Ford
and the Ford F-150. Like many automakers, Ford has been
hit hard by the coronavirus with production pullbacks and
at least temporary demand slowdowns. Of course, one bright
spot for automakers has been that the pickup truck market suffered
a lot less during the Covid-19 pandemic than
did other segments. The second largest U.S. automaker has also undergone some big
changes at the top in recent months financial results for
2019 and the last quarter of that year
were deeply disappointing. In February 2020, the company said
that Joe Hinrichs, a then 53 year old top executive who had
been on many industry shortlists for a future job as CEO
of Ford, abruptly announced his retirement. Henrik's went on to take
a board seat for an autonomous driving technology
company called WaveSense. Then CEO Jim Hackett who had
taken the job in 2017, abruptly announced his retirement
in August 2020. Hackett's successor is Jim Farley,
another top Ford executive who had been serving as
the company's chief operating officer before taking the helm. Ford is struggling in
its international segments. It's having a hard time in
Europe, a region GM exited entirely in recent years, and in China,
which is considered a key market for global automakers. But one where doing business is
not easy, especially with trade tensions between China
and the U.S. There have been
some bright spots. Ford is keeping up with the
ever growing electric vehicle trend with its Mustang
Mach-E electric crossover. The company's new Bronco off-road
SUV has garnered praise for its design, engineering,
and innovative features. Its North American business remains
strong, thanks in large part to the F-150. The test for the company now is
seeing if it can keep it that way.
